China Resources Gas Group, the largest distributor of city gas in China, will initiate off-season natural gas prices earlier following the government's instruction to support the economy amid the coronavirus outbreak. The off-season prices will be started in February, earlier than the typical implementation from mid-March to mid-November.
The instruction came from the National Development and Reform Commission, which asked all natural gas suppliers and distributors to implement off-season prices earlier as mitigation to companies' losses due to the epidemic.
CR Gas will start off-season prices for more than 218,000 commercial users and 18,000 industrial users from February 1, as the NDRC stated on Monday. An official with CR Gas said that there could be a 20% to 40% gap between peak and off-peak season prices.
China's price mechanism allows suppliers to increase prices by up to 20% higher than the benchmark city gate prices. However, NDRC has urged local authorities to lower the benchmark prices. Hence, distributors can offer lower rates and help the struggling industries amid the outbreak.
Analysts at Bernstein said the policy would hurt upstream producers' revenue. PetroChina's revenue is expected to decline by CNY7 billion ($996.4 million) in the first quarter due to lower city gas prices.
